Bristol-Myers Squibb stuffed $1.5B in inventory to fake sales — and paid $150M to settle

Bristol-Myers Squibb, one of the world's largest pharmaceutical companies, engaged in a practice known as 'channel stuffing' — offering excess inventory to wholesalers and distributors to artificially inflate sales numbers. The company improperly booked sales that had not actually occurred, creating a significant gap between reported revenue and true demand for its products.

The scandal came to light in 2002. The SEC and the Department of Justice launched investigations into Bristol-Myers' accounting practices. The company was forced to restate its financial results for 1999 through 2001, and later restated a full five years of results in 2004. The total improperly booked revenue was estimated at over $1.5 billion.

Bristol-Myers settled with the DOJ and SEC for $150 million in 2004, and was placed under the oversight of a court-appointed monitor. Richard Lane, former head of the Pharma group, and Fred Schiff, former CFO, were indicted for federal securities violations. CEO Peter Dolan stepped down in 2006, though his departure was related to a separate dispute over the Plavix patent.